Borrowing costs in Europe’s most indebted countries spiked higher yesterday as the result of the Greek referendum sent shockwaves around the world.

Voters in Greece used Sunday’s plebiscite to reject the terms of the bailout offered by the International Monetary Fund, European Central Bank and European Commission – plunging the Continent into crisis.

German chancellor Angela Merkel said the door remained open to new talks, although she warned it is for Greece to come up with 'serious, credible' new proposals to deal with its debt crisis, as eurozone leaders gathered for an emergency summit to discuss its future in the single currency.

But she said the conditions for reopening negotiations 'are still not in place and that is why we wait to see the detailed proposals' from the radical left Syriza government led by Alexis Tsipras.

The resounding ‘oxi’ or ‘no’ to austerity has pushed the shattered country closer to ejection from the eurozone and possibly even the European Union.

Nina Skero, an economist at the Centre for Economics and Business Research, said: ‘The outcome of the Greek referendum substantially increases the chances of a Grexit and puts the eurozone in uncharted territory.’

The yield on ten-year Greek bonds – a key indicator of how much it would cost the government to borrow on the financial markets – jumped above 18 per cent to its highest level since 2012, while the yield on two-year bonds headed towards 50 per cent.

The benchmark costs of borrowing for ten years in Italy, Spain and Portugal also edged higher amid fears that the crisis in Greece could spread to other countries. European leaders are growing increasingly nervous about elections in Spain later this year.

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Joshua Mahony, market analyst at City trading firm IG, said: ‘Ultimately, the vote for “oxi” could serve as a proxy for the likes of Spain, whose population has grown tired of spending cuts and tax hikes. Whatever the ultimate fate of Greece, it could be blazing a trail for other anti-austerity parties to follow elsewhere in the eurozone should renegotiation reduce the harshness of austerity, or if an eventual Grexit turns out to be beneficial.’

Greece has already missed a debt payment to the IMF – making it the first Western economy to enter ‘arrears’ with the Fund.

Good day for De La Rue

Shares in money-printer De La Rue were spurred over fears Greece could ditch the euro.

De La Rue produces 150 currencies worldwide, and there were reports it had already been contacted about providing its services to Athens.

Shares rose as high as 518.5p before easing to close flat at 508p – one of the few firms to avoid falling. The group refused to comment.

It faces an even more crucial payment of £2.5billion to the ECB on July 20.

Failure to meet that deadline could see the central bank withdraw all support for Greek lenders – leading to a collapse of the already fragile banking system and expulsion from the euro.

Analysts at JP Morgan warned that a new Greek currency ‘would probably depreciate at least 50 per cent in its first year after introduction’. Other countries such as Indonesia, Russia and Argentina also suffered huge devaluations following a change in currency regimes (see chart). Stock markets around the world lurched lower yesterday and the euro was hammered on the international currency markets as investors dumped risky assets in favour of ‘safe-havens’ such as UK gilts, Germany bunds and US Treasuries.

The FTSE 100 index dipped five points to 6530.3 during early trading today, having closed down 50.1 points at 6,535.68 last night. That took losses since April’s all-time high above 7,100 to 8 per cent or £145billion.

Stock markets in Europe fared even worse with the main benchmark in Milan down 4 per cent while Madrid fell 2.2 per cent, Paris 2 per cent and Frankfurt 1.5 per cent on Monday. They nudged up slightly this morning ahead of the day's meetings, but the Athens stock market remained closed – protecting Greek companies and banks in particular from the carnage.

Sterling rose as high as €1.4144 – up more than 12 per cent on a year ago when £1 was worth less than €1.26, falling slight to €1.4118 this morning. The euro was also down against the US dollar, dipping below $1.10 at one point, on a difficult day for the single currency.

Kathleen Brooks, research director at currency experts Forex.com, said the euro was ‘extremely vulnerable to speculative attack in the coming days’.

‘Expect a lot of volatility,’ she said. ‘The initial reaction could be the tip of the iceberg and risky assets could come under sustained downward pressure in the next few sessions as the latest act in the Greek saga unfolds.’

Helal Miah, investment research analyst at online stockbroker The Share Centre, said: ‘For investors, an exit could create prolonged uncertainty and an increasing amount of volatility in the European markets. The risk of contagion of confidence to other eurozone nations is the most worrying.’

Meanwhile, Downing Street has made clear Prime Minister David Cameron believes Athens and its eurozone partners must work together on a sustainable solution to the problems caused by Greece's failure to keep up interest payments on its international debts.

Neither Number 10 nor Chancellor George Osborne would be drawn on whether they favoured a Greek exit from the single currency - the outcome which many in Europe had suggested pre-vote would be the result of a referendum 'no'.

Mr Osborne told MPs the 'prospects of a happy resolution to this crisis are sadly diminishing' and warned that the UK would not escape the fallout despite remaining outside the eurozone.